The Layman's Guide to Educational Debt Management
Steps for Managing Your Student Loans
This Guide is based on eight simple steps for managing
your student loans:
Step 1: Know what you borrowed,
from whom you borrowed, and who services the loans.
This information should have been provided at your senior loan exit
interview, and depending on the type of loan, may also be available on
your loan servicer's Web site. It's very important to know who services
your student loans.
Step 2: Know the "relative
cost" of your student loans.
Once you know which of your loans are subsidized and which are unsubsidized,
be sure to know their interest rates and their capitalization terms. This
could save you money in repayment, especially if you make voluntary payments
or additional payments on your loans when they come due and you enter
"active" repayment.
Step 3: Know your grace
periods, deferment options, and forbearance options.
Perhaps one of the most important strategies, these tools will help
you manage your loans throughout residency. Most likely, they'll vary
by loan type, and may even vary depending on when you borrowed and from
which lender or loan program you borrowed.
Step 4: Know your "decision
points" and keep a calendar.
This section discusses when to file deferment forms and forbearance
requests (if need be), as well as when to choose repayment options including
loan consolidation. Our Loan Repayment Timetable may help.
Step 5: Run the numbers
before choosing a repayment option or consolidating your student loans.
Once any grace, deferment, and forbearance options you have are used
and exhausted, you should be given a number of repayment options. Be sure
you know both your a) monthly payment amount and b) estimated total repayment
amount for any repayment option you choose, especially if you consolidate
your loans. For more information on consolidation, please see the AAMC
Loan Consolidation Primer.
Step 6: Commit to keeping
good records.
It is ultimately the borrower's responsibility to keep the proper
documentation on their student loans. Good record keeping could prove
very helpful if you ever run into problems with loan servicing.
Step 7: Keep a budget
and know when you need the help of a financial professional.
Understanding your student loans may be only the first step. You may
need help with your finances from a professional such as a certified financial
planner, tax accountant, or other financial professional.
Step 8: Know and use
your support systems.
Keep in touch with your financial aid officer, your loan servicer(s),
the financial aid office of your medical center if they offer debt management
services for residents, and other organizations offering support on debt
management issues, including the AAMC's Web site.
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